Ninth Circuit Court Sides with Board of Pharmacy’s Regulation and Licensure of Outsourcing Facilities Created Under Federal Law


By Anna Schwartz

Fusion IV Pharm., Inc. v. Sodergren, 809 F. App’x 438 (9th Cir. 2020). On June 17, 2020, the United States Court of Appeal for the Ninth Circuit affirmed the district court’s grant of judgment on the pleadings in Fusion IV Pharmaceuticals, Inc.’s (Fusion IV) suit against Anne Sodergren in her official capacity as the Interim Executive Officer of the California State Board of Pharmacy (BOP). Fusion IV is a federally registered outsourcing facility that compounds drugs in California for interstate distribution. Fusion IV filed suit against Ms. Sodergren and BOP in the federal district court in 2019 challenging California Business and Professions Code section 4129, which requires outsourcing facilities to be concurrently licensed by BOP and the FDA if such facilities compound non-patient specific drug products for distribution within or into California.

In Fusion IV Pharm., Inc. v. Sodergren, Case No. 2:19-cv-01127-PA-FFM (C.D. Cal.), Fusion IV claimed BOP’s licensing requirements are preempted by the Drug Quality and Security Act (DQSA) and violate the Commerce Clause of the United States Constitution. The district court rejected both arguments. On June 17, 2020, the Ninth Circuit affirmed the district court’s decision that California’s requirements are not preempted by the DQSA, and that Fusion IV failed to establish that the requirements impose a “substantial burden” on interstate commerce in violation of the Commerce Clause.

BOP’s win creates a federal appellate court precedent stating that outsourcing facilities are subject to a state pharmacy board’s oversight and regulation. Now, outsourcing facilities engaging in interstate commerce in California, like Fusion IV, must comply with BOP’s licensing regulations.


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